“If you build it, they will come.”
– Field of Dreams, 1989
In the early 80s, the Philippines was in the throes of crisis. Political instability led to worsening economic conditions, and the country and the people reeled under the burdens of declining purchasing power, crushing inflation, and debilitating poverty.
Against this backdrop, along Calle Industria in Bagumbayan, Dean & Leon Lao went ahead and built a new resin plant, producing polystyrene, emulsions, unsaturated polyesters, etc. Amidst the chaos and the gloom which preceded the EDSA revolution, the brothers just knew that a construction boom was coming, and were preparing for the turnaround.
“That is what Mr. Dean and Mr. Leon would always say: There is always an opportunity in every crisis. They are betting on that even up to now. That’s why we continuously build plants even during crisis. They can already foresee the demand because of the belief in the goodness of our products. If the time comes that the demand for our product booms, and of course competition comes, we are already way ahead,” Supply Chain manager Rey Santamaria said.
The Lao brothers’ bet was hedged by a few things, particularly, the superiority of their products, the formidable competence of their technical people and their plant engineers’ skill and ability to build totally new factories from scratch.
So, with the change in regime and the renewed hope & belief in the future of the country, D&L was ready to feed the construction boom with the cutting-edge binders for paints and adhesives that it needed.
Begin with a superior product. Develop a vision for the future. Be resilient, so as to weather the ups and downs of a changing market. Be there first when a new opportunity opens up. This is the formula by which Dean & Leon live by. This is the maxim by which Chemrez thrives to this day.
By the turn of the century, when the construction industry had stabilized, and tariff barriers were going down across Asia, the Bagumbayan plant now had to face an influx of cheap resin imports.
Mr. Dean & Mr. Leon refused to give up but hunkered down instead. By 2005, Chemrez had diversified into specialty products, including resin & coatings, colorants, oleochemicals for food and personal care, and crop science product lines. Such product diversity allowed the company to survive the commoditization of polysterene, which otherwise cut short the business lives of erstwhile local competitors.
“The beauty of being so diversified is if there are times that if a specific industry booms, it can support those that are lagging. Sir Leon would say, ‘We are the last man standing. When the time comes, our businesses are still alive and we have outlasted the competition.’ There was a time that resin and emulsion industries were down because of the construction lull of the 90s. By mid 2000s, the said industries were resurrected – proving Mr. Leon’s concept,” Santamaria expounded.
A Pioneer of Biodiesel
Also in 2005, Chemrez build its pioneering biodiesel plant even before there was a renewable energy law to bank on. Using coconut oil as the feedstock for biodiesel, three clear benefits convinced the brothers of the wisdom of their business decision.
First, coconut farmers would have a new source of revenue for their crop. Second, coconut-based biodiesel significantly reduces harmful engine emissions. Third, the higher grades of biodiesel proportionately lessen the country’s reliance on imported diesel fuel.
“During the time we build our biodiesel plant, there was no such thing as Biofuel law. Chemrez actually is one of the primary authors of the Biofuel act. Together with our consultant Mr. Rafael Diaz, managing director of the Asian Institute of Petroleum Studies Inc. (AIPSI), we contributed in feeding the right data and info on benefits of biodiesel to the lawmakers in Congress and Senate to pass the bill,” Santamaria believes.
Shortly, thereafter, Congress enacted RA 9367, the Biofuels Act of 2006. To this day, Chemrez remains a leading supplier of biodiesel to the country’s major and independent diesel retailers.
No “me too” products
First, with the resin plant, then with the biodiesel and oleochemical plants, the company continued to utilize excess production capacity and to create new revenue streams, particularly customized solutions for its industrial customers.
“Our customers have calculated that importing products from China, Korea, Taiwan and Thailand may be cheaper, but these large companies are unable to customize according to our customer’s requirements,” Santamaria said.
The Company has forged a name for itself creating tailored ingredients for its customers, in lieu of imported commodities. Chemrez has made a science of the art of meeting exacting customer requirements. This, in turn, allows the Company to draw higher margins than would be possible from me-too products, both imported and locally manufactured.
“Since we are offering products that are innovative and custom-made, customers now flock to us. And given that we’ve foreseen constant demand, we then continue expanding,” Santamaria said.
By 2006, Chemrez has commissioned its biodiesel plant, the first continuous biodiesel plant in the country, producing 200 tonnes of coco-biodiesel per day. Interestingly, this plant is also a pioneer in Southeast Asia.
“In the Q1 of 2007, the Biofuel law was enacted into law requiring a mandatory 1% blend on all diesel to be sold throughout the country. In early 2010, Chemrez then built an oleochemical plant to make high value coconut-derived products. We marketed and exported specialty ingredients and additives for various applications, that includes, but not limited to, personal & home care, and health & nutritional food ingredients” Santamaria explained.
Due to its passion for constant innovation, in 2011, Chemrez was granted pioneering status for specialty oleochemical plants because of its use of specialty esters as feed stock to produce improved oleochemical products like foam boosters for detergents, shampoos and surfactants – an improved version of what is in the market.
The birth of innovative products such as Savonel, a natural primary surfactant for detergents, is credited to the regular meetings composed of the founders, technical and manufacturing teams and the company consultants. With no boundaries, the team meets weekly to throw around ideas, to brainstorm, to see which out-of-the-box thought has legs.
“Our discussions are no-holds-barred; any sensible ideas are entertained. We look for the opportunity to launch innovative product that is not yet circulated in the market. And given our belief in our product, we start already with building plants for expansion,” Santamaria said.
This is the spirit of innovation in Chemrez. Seasoned chemists exchange ideas with young bloods, as the patriarchs weigh in with their own fountain of wisdom to draw on. The spirit of collegiality very much lives and breathes with this diverse group of tech-minded individuals drawn from various disciplines, sharpening ideas which lead to Chemrez’ next big thing.
Aside from passion for innovation, another source of pride is the technical competence of chemists/engineers. Held in high-esteem in the industry, Chemrez chemists/engineers live by the high standards promulgated in all its plants:
- ISO 9001 Quality Management System
- ISO 14000 Environmental Management
- Food Safety System Certification 22000
- OHSAS 18001:2007 Occupational Health and Safety Management Certification
“Employees have high morale because they know they work for a company with integrity and high moral values. They feel they belong and are involved with the higher management who keeps on asking for new ideas from them. When those from the lower ranks are involved, the chance of success is greater. They are motivated to become more effective, efficient and productive for the plant,” Santamaria said.
Empowering employees has been the key for growth in Chemrez. They have grown with us and defined what it is to be with the Company. Our strict standards and best practices ensure the quality of our work and of our products. By allowing innovation to spawn from anywhere among our ranks, our people are valued stakeholders in defining Chemrez’ future.
Never resting on its laurels
On a greenfield site, the JADEL Research Center (JRC) slowly rises. Within a few short years, the Company’s R&D resources will move into its new home. The most modern process equipment and high-tech instruments will meet the country’s up and coming scientists, as they come together to make new discoveries and create new products we haven’t even dreamed of.
“We also have a site in Batangas for major expansion, a significantly large world-class plant to look forward to. We will definitely not stop building,” Santamaria said.
With the strong leadership, technical competence and passion for innovation of the people behind Chemrez, “more and more facilities will be built and customers will definitely continue to come,” Santamaria concludes.